PFD bill helps military, but could lead to fraud

JUNEAU — Alaska’s military members who serve out-of-state will have an easier time getting their PFD checks under a bill that passed the Legislature on Friday, but some lawmakers worry that the measure could help people out of state fraudulently obtain the cherished annual payments.

The current “10-year rule” says that those who have been out of the state for over 180 days for 10 consecutive years, excluding congressional members or their staff, cannot get another Permanent Fund Dividend check.

About 50 to 100 people a year have been denied PFDs — the annual payment that Alaskans get from the state’s oil wealth— under the rule since it took effect in 2008. About 80 percent of those rejected are connected to the military, according to Permanent Fund Dividend Director Dan DeBartolo.

Rep. Eric Feige’s House Bill 52 addresses the issue by axing the 10-year rule and applying new standards for all Alaskans, including service members, who intend to return.

To continue receiving a PFD, anyone who is still living outside of Alaska after getting an allowable absence for five consecutive years must prove they intend to return — and meet more stringent qualifications, which include providing home ownership records or proof of where one was raised.

A similar version of the five-year-rule is included in the division’s current regulations.

But some lawmakers worry that Feige’s approach could create dangerous loopholes.

“The permanent fund dividend is intended for people who live in Alaska, have to pay the high cost of fuel, the high cost of heating, just the high costs we have up here,” said Rep. Les Gara, D-Anchorage. “The bill now opens that up to every single person who leaves Alaska and doesn’t have those costs, and opens up the whole Permanent Fund up to fraud now.”

DeBartolo said each year over the past decade he has seen about 250 out-of-state applicants apply for a PFD after more than five consecutive years of allowable absences.

“We still review each application that comes in every year, especially the ones that rise to the level of a five-year absence,” DeBartolo said. “Those are going to get plenty of scrutiny by our technicians, and it’s not so easy just to defraud the division simply because there isn’t a 10-year rule in place anymore.”

DeBartolo says that moving the five-year rule from regulation to statute will give his division a better defense in court if people try to appeal a PFD denial. The time and resources saved can instead be devoted to reviewing applications; cost-wise, it’s an “administrative wash.”

An email to Sen. Bill Wielechowski’s office from the Department of Revenue says that since 1995, 1,001 individuals have received PFDs for 10 years or more while living outside of Alaska and claiming an allowable absence. Collectively, they’ve received almost $19 million.

“After 10 years, it’s highly, highly unlikely that you’re coming back,” Wielechowski, D-Anchorage, said during the bill’s debate on the Senate floor. “The statistics from the Permanent Fund Division show that to be the case.”

Wielechowski and Gara each recommended creating an exemption for military members and their families from the 10-year rule instead of getting rid of it completely.

Feige said that his office looked at a number of ways to craft the bill. However, he wanted to try to avoid any sort of court challenge to the legislation under the equal protection clause.

“Just putting an arbitrary 10-year limit, in my view, didn’t really accomplish anything,” Feige said. “We looked at a number of different ways to accomplish this, and the one that was fair and applied to everybody equally was the intent-to-return standard.”